Income Beginner: Introduction to Certificates of Deposit (CDs)

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1.
You can buy negotiable certificates of deposit in any amount.
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False. You can buy them only in amounts over $100,000.
2.
The alternative to a fixed-rate certificate of deposit (CD) is a(n) _________.
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Variable-rate CD. This rate changes periodically along with the market.
3.
What is the denomination range for small-savings certificates of deposit?
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Less than $100,000. Small-savings CDs may not exceed $100,000.
4.
If you withdraw your money from a certificate of deposit before the maturity date, you will typically be penalized three to six months interest/dividends.
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True. On the average, the penalty is three to six months worth of earnings.
5.
Why are negotiable CDs called negotiable?
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Investors can negotiate the interest/dividend rates. Although investors can negotiate numerous properties of these CDs, the name comes from the privilege of negotiating the interest/dividend rates.